Upon graduating with an accounting degree, you open your own accounting firm of which you are the sole employee. To start the firm you passed on a job offer with a large accounting firm that offered you a salary of $60,000 anually. Last year you earned a total revenue of $100,000. Rent and supplies last year were $50,000.
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SCENARIO 7.3: Upon graduating with an accounting degree, you open your own accounting firm of which you are the sole employee. To start the firm you passed on a job offer with a large accounting firm that offered you a salary of $60,000 anually. Last year you earned a total revenue of $100,000. Rent and supplies last year were $50,000.
12) Refer to Scenario 7.3. Your annual economic costs are
A) $110,000. B) $60,000. C) $50,000. D) $0
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- Consider the following scenario in relation to your Notary, Loan Signing Agent and Marriage officiant practice in Hawaii and determine the opportunity cost of leaving your job to become an entrepreneur. You currently make $90,000 per year at your job plus benefits (equal to 30% of your salary). On January 1 of the New Year, you start your own business. After the first year, your accountant informs you that you made $45,000 and out of that you paid $6,000 for health insurance. What was your opportunity cost? If your opportunity cost is higher than you would like, how can you lower your opportunity cost in the future years?Suppose you decided to open your own bakery business. At the start of the year you took $18,477 out of you saving account, where the money had been earning an interest rate of7%, and you used it to purchase ovens and other equipment needed for the bakery. You also quit your job where you were earning $55,787 per year. Over the course of the year you spent $8,102 on ingredients like flour and sugar, $40,316 on the salaries of two employees, $15,214 on rent for you bakery space and $14,150 on other miscellaneous like electricity, packaging and office supplies. Over the course of the year you sold 22,340 bakery items (cakes, pies and so on) at an average price of $8 each. What was your accounting profit last year?You are currently in a job as a chef in a restaurant earning $100,000 per year. You are considering opening up a restaurant in a building which you currently own. You estimate that, if you wanted to, you could rent out your building for $25,000 per year to another restaurant. Last year, your revenues and expenses from the restaurant were the following: Revenues $400,000Cost of Food $120,000Salaries/Wages $100,000Utilities $25,000Taxes $20,000 What is your accounting profit? Show your calculations What is your economic profit? Show your calculations Assuming that you are indifferent between being a chef or owning a restaurant, should you open up your restaurant? Explain why. Now suppose that instead of owning the building where your restaurant will be located, you had to pay rent of $25,000 per year for the building. Will your answers to parts 1-3 change? Show your calculations. Explain how and why your answers will change or…
- You want to quit your job and return to school for an MBA degree 3 years from now, and you plan to save $5,900 per year, beginning immediately. You will make 3 deposits in an account that pays 6.2% interest. Under these assumptions, how much will you have 3 years from today? a. $19,605.44 Ob. $19,840.95 c. $23,330.48 d. $19,986.92 e. $21,173.88Suppose your expenses for summer school are as follows: tuition: $5,000, room and board: $3,000, books and other educational supplies: $500. Further, during the term, you can only work part-time and earn $4,000 instead of your full-time salary of $10,000. What is the opportunity cost of going to college this term?Answer the following: You are contemplating a job offer with an advertising agency where you will make 54,000 in your first year of employment. Alternatively, you can begin to work with your father's business where you will earn an annual salary of 38,000. 1. Where will you work? a. Advertising agency b. Fathers business c. I choose not to work 2. If you choose to work where you will earn most, what is the opportunity cost? a. 54,000 b. 38,000 3. What is the differential revenue?a. 54,000 b. 38,000 c. 16,000
- You're a graduate and the company that hires you offers a job that includes a paid apartment in Austin. You only need to pay for services and maintenance. You go ahead and make calculations and come up that each year you need to pay $36,000 to cover all expenses. Each year it sums up to $36,500 and every consequent year increasing by $500 through year 10. At an interest rate of 10% per year, the present worth of the maintenance costs are going to be how much?Use the present value and future value tables to answer the following questions. Time Value of Money - Principles of Accounting, Volume 2: Managerial Accounting | OpenStax A. If you would like to accumulate $2,400 over the next 5 years when the interest rate is 15%, how much do you need to deposit in the account? $_____ B. If you place $6,200 in a savings account, how much will you have at the end of 6 years with a 12% interest rate? $_____ C. You invest $7,000 per year for 11 years at 12% interest, how much will you have at the end of 11 years? $_____ D. You win the lottery and can either receive $760,000 as a lump sum or $60,000 per year for 19 years. Assuming you can earn 8% interest, which do you recommend and why? _____Use the following information to do a CBA of going to college and earning your BS degree instead of working with your HS diploma. Assume that you are unable to work during the time you are in college HS income: $36,000BS income: $63,000College out of pocket costs: $13,000 College n 4 yearsCareer n 35 years Use r=3% and annual compounding
- you receive $125,000 in year 1 for a job to be started and completed in year 2 . However, you purchase materials and supplies to prepare for the upcoming job. Materials and upplies purchased in year 1 cost$60,000in year 2 you determine that you would need to purchase an additional$30,000in supplies. Determine the profit for year 1 and 2 under both accrual and cash accounting(Management Accounting) Mary is considering leaving her current position to open an ice cream shop. Mary's current annual salary is $77,000. Annual ice cream shop revenue and costs are estimated at $260,000 and $210,000, respectively. What is Mary's annual opportunity cost of starting the ice cream shop? A) $50,000 B) $77,000 C) $210,000 D) $260,000A business is deciding whether to give an end-of-year bonus of $5000 each year for the next four years to an employee, in order to increase the number of sales that employee makes. What is the minimum extra profit the employee must generate this year for the bonus to be worthwhile over the next four years, if the discount rate is 7%? O A. $18,600 OB. $16,936 OC. $12,263 O D. $14,480 OE. $20,000